Apple Profit Top Estimates on Record Sales of IPhone, IPad
July 19 (Bloomberg) -- Apple Inc., the biggest technology company by market value, reported third-quarter profit that topped estimates, lifted by record sales of iPhones and iPad tablets. The stock jumped to an all-time high in late trading.
Net income in the period more than doubled to $7.31 billion, or $7.79 a share, from $3.25 billion, or $3.51, a year earlier, Apple said today in a statement. Sales climbed 82 percent to $28.6 billion. Analysts had predicted profit of $5.87 a share and revenue of $25 billion, according to Bloomberg data.
The report eased investors' concerns that sales would suffer from the lack of a new iPhone -- Apple's best-selling product -- which isn't expected until September. The Cupertino, California-based company also has been operating without the day-to-day attention of Chief Executive Officer Steve Jobs, who has been on medical leave since January.
"Apple is a juggernaut and they prove it every quarter," said Mike Binger, an Apple investor at Thrivent Asset Management in Appleton, Wisconsin, which has about $70 billion under management.
Apple shares jumped as much as 7.5 percent to $405 in extended trading after the results were posted. The stock, up 17 percent this year, had closed at a record $376.85 in regular Nasdaq Stock Market trading.
IPhone Orders
Apple's expansion into China and other fast-growing economies helped make up for slower growth in the U.S. Apple sold 20.3 million iPhones and 9.3 million iPads in the third quarter, which ended June 25. Mac computer sales were 3.95 million, short of a record. The iPad -- a product that's less than two years old -- is now Apple's second-biggest source of revenue, after the iPhone.
The company said profit in the fourth quarter would be about $5.50 a share on sales of $25 billion. Analysts on average predict $6.41 a share on sales of $27.7 billion.
Apple typically gives a lowball forecast, making it less relevant to investors, said Thrivent's Binger.
"The forecast is meaningless," he said.
Gross profit margin, the percentage of sales left after deducting production costs, was 41.7 percent last quarter, compared with 39.1 percent a year earlier, Apple said.
"We're thrilled to deliver our best quarter ever, with revenue up 82 percent and profits up 125 percent," Jobs said in the statement. With the CEO and company co-founder on medical leave, Chief Operating Officer Tim Cook is handling day-to-day leadership.
Next CEO?
Since Jobs went on leave, some members of Apple's board have discussed CEO succession with executive recruiters, the Wall Street Journal reported earlier today, citing unnamed people familiar with the matter. The talks included at least one head of a high-profile technology company, the Journal said.
The health of Jobs, who has struggled with a rare form of cancer, is the only major concern for Apple, said Erick Maronak, chief investment officer of Victory Capital Management Inc. in New York, which has about $2.5 billion under management.
"In the end it's really all going to circle back to Jobs -- his health, his role," Maronak said. Apple is his firm's largest holding, accounting for about 5 percent, he said.
Jobs's health wasn't discussed on Apple's conference call today, and no analysts inquired about it.
Apple's Chinese sales reached $3.8 billion, up almost sixfold from a year earlier. The company plans to open 30 stores in the September period, including in Hong Kong, broadening a retail chain that generated $3.5 billion in sales last quarter.
"China was very key to our results," Cook said on a conference call. "We're just scratching the surface. There is an incredible opportunity for Apple there."
Topping Projections
Apple typically reports results that exceed analysts' estimates. The company had previously beaten the average earning projection for at least 29 straight quarters, according to data compiled by Bloomberg.
"The biggest question with Apple is: Is this story sustainable?" said Shaw Wu, an analyst with Sterne Agee & Leach Inc. in San Francisco. "Obviously, it is."
In the third quarter, Apple also sold 7.54 million iPod media players, compared with the 8.5 million predicted by analysts. That product is the oldest of Apple's main mobile devices, and it faces cannibalization from the iPhone and iPad, which also can play music.
It was the first time since 2008 that the third-quarter results didn't include the release of a new iPhone. The new model slated for September has a faster chip for processing data and an 8-megapixel camera, two people familiar with the matter said last month.
The company also is preparing to introduce a new Mac operating system, called OS X Lion, and the iCloud service, which let users store, synchronize and access content such as music, pictures and documents across different Apple devices.
"We are extremely pleased with the momentum of our business," Peter Oppenheimer, the company's chief financial officer, said on the call.
To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net .
Find out more about Bloomberg for iPad: http://m.bloomberg.com/ipad/Stocks, Treasuries, Oil Decline as Bernanke Damps Stimulus Bets
July 14 (Bloomberg) -- Stocks fell, driving the Standard & Poor's 500 Index to the lowest level of the month, and oil slumped after Federal Reserve Chairman Ben S. Bernanke said he's not prepared to take immediate action to stimulate the economy. Gold and silver gained, while U.S. Treasuries dropped.
The S&P 500 slumped 0.8 percent at 1:20 p.m. in New York after slid to as low as 1,307.15, the weakest intraday level since June 29. The MSCI All-Country World Index of shares in 45 nations lost 0.7 percent. Yields on 10-year Treasuries climbed one basis point to 2.89 percent on concern political gridlock will cause the U.S. to lose its top credit rating. U.S. notes pared losses after an auction of 30-year debt. Crude retreated 3.4 percent to $94.73 a barrel. Gold futures touched a record for a second day silver jumped 1.6 percent.
Bernanke's remarks snuffed out an early rally in stocks triggered by better-than-forest earnings at JPMorgan Chase & Co. and improving economic data. Treasuries slid after Moody's Investors Service said yesterday it may cut the U.S. government's Aaa rating as negotiations to increase the debt limit stall in Congress.
"Bernanke may have spooked markets, but the markets better get used to no QE3," Brian Belski, chief investment strategist at Oppenheimer & Co., said in a telephone interview. "All eyes are on Washington in terms of the budget. We're in this classic tug-of-war between micro and macro because of the earnings season, which is still very early. It's still too soon to put a defining word on earnings."
Gain Erased
The S&P 500 erased yesterday's 0.3 percent gain, which snapped a three-day slump that dragged it down 2.9 percent. JPMorgan was the first major U.S. bank to report second-quarter earnings. Google Inc., the biggest Internet search company, will release results after markets close.
Early gains were also spurred by a government report that showed initial jobless claims fell by 22,000 to 405,000 last week. Other data showed U.S. wholesale costs dropped more than forecast in June and sales stagnated at U.S. retailers last month.
The dollar weakened 0.9 percent versus the New Zealand dollar, which strengthened against all 16 major peers monitored by Bloomberg after a report showed manufacturing and farming led the fastest quarterly growth in more than a year, spurring speculation the central bank will raise interest rates.
The yield on the 30-year Treasury bond climbed two basis points to 4.19 percent after the U.S. sold $13 billion of the securities, the last of three auctions this week totaling $66 billion.
Default Swaps Rise
Credit-default swaps insuring U.S. debt climbed 5 basis points to 55 as of 11:16 a.m. in New York, the highest since February 2010, according to CMA.
Italian government bonds declined, sending the 10-year yield up nine basis points to 5.63 percent, as borrowing costs rose to a three-year high at a sale of five-year debt today even as the nation's Senate voted for budget cuts.
The yield on the Spanish 10-year bond rose six basis points, driving the premium investors demand to hold the debt instead of benchmark German bunds six basis points higher to 314 basis points.
More than six shares fell for every one that advanced in the Stoxx Europe 600 Index, which slid 0.8 percent. Software AG, Germany's second-biggest maker of business software, plunged 16 percent after reporting a decline in sales. Daily Mail & General Trust Plc lost 4.1 percent as the publisher of the Daily Mail newspaper said advertising revenue fell.
To contact the reporters on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net Victoria Stilwell in New York at vstilwell@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
Find out more about Bloomberg for iPad: http://m.bloomberg.com/ipad/| Rank | Company | Country | Sales | Profits | Assets | Market Value |
|---|---|---|---|---|---|---|
| 68 |  China Life Insurance | China | $48.2 B | $4.8 B | $179.6 B | $96.6 B |
| 116 |  Prudential Financial | United States | $38.4 B | $3.2 B | $539.9 B | $30.7 B |
| 117 |  Prudential | United Kingdom | $75.6 B | $2.2 B | $408.3 B | $29.4 B |
| 135 |  Aviva | United Kingdom | $90.7 B | $2.3 B | $567.9 B | $20.5 B |
| 188 |  Aflac | United States | $20.7 B | $2.3 B | $101 B | $26.1 B |
| 191 |  AIA Group | Hong Kong-China | $14.6 B | $2.7 B | $107.9 B | $35.7 B |
| 208 |  Sun Life Financial | Canada | $24.8 B | $1.7 B | $211.1 B | $17.8 B |
| 244 |  Legal & General Group | United Kingdom | $60.2 B | $1.3 B | $507.1 B | $10.8 B |
| 268 |  Dai-ichi Life Insurance | Japan | $53.5 B | $595.6 M | $339.9 B | $17.9 B |
| 289 |  China Pacific Insurance | China | $14.7 B | $1.1 B | $58.1 B | $31.1 B |
| 296 |  Samsung Life Insurance | South Korea | $21.8 B | $800.1 M | $117.7 B | $18.9 B |
| 428 |  Standard Life | United Kingdom | $29.1 B | $676.4 M | $241.3 B | $8.2 B |
| 451 |  Lincoln National | United States | $10.4 B | $980.3 M | $193.8 B | $9.6 B |
| 462 |  Manulife Financial | Canada | $37.9 B | -$314 M | $420.1 B | $31.6 B |
| 518 |  Cathay Financial | Taiwan | $10.1 B | $345.5 M | $134.3 B | $16.4 B |
| 532 |  Unum Group | United States | $10.2 B | $886.1 M | $57.3 B | $8.2 B |
| 564 |  Sanlam | South Africa | $9.2 B | $756.3 M | $54.6 B | $8.2 B |
| 576 |  Swiss Life Holding | Switzerland | $24.5 B | $538.8 M | $139.1 B | $5.2 B |
| 580 |  Old Mutual | United Kingdom | $33.8 B | -$441.5 M | $303 B | $11.7 B |
| 588 |  T&D Holdings | Japan | $23.7 B | $259.9 M | $136.1 B | $9.7 B |
| 676 |  Resolution | United Kingdom | $4.2 B | $1.8 B | $98.6 B | $6.6 B |
| 757 |  Korea Life Insurance | South Korea | $11 B | $369.5 M | $55.6 B | $5.9 B |
| 878 |  Mediolanum | Italy | $18.6 B | $311.3 M | $41.2 B | $3.6 B |
| 1142 |  Industrial Alliance Insur | Canada | $6.8 B | $276.8 M | $33.9 B | $3.5 B |
| 1316 |  Torchmark | United States | $3.4 B | $517.1 M | $16.2 B | $5.1 B |
| 1394 |  CNO Financial Group | United States | $4.1 B | $284.6 M | $31.9 B | $1.8 B |
| 1483 |  Protective Life | United States | $3.1 B | $260.2 M | $47.6 B | $2.3 B |
| 1852 |  American Equity Invest | United States | $1.3 B | $42.9 M | $26.4 B | $758 M |
| 1874 |  Symetra Financial | United States | $1.9 B | $200.9 M | $25.6 B | $1.6 B |
| 1972 |  Phoenix Cos | United States | $2.1 B | -$12.6 M | $21.1 B | $286 M |
